[blam]

Will someone explain what all this means.

[ExSES]

Federal Reserve agreed this week to bend key banking regulations to help out Citigroup...

I need a $10 million loan and I have this large box for collateral. I know that it smells like cr*p, but..., "trust me", it is filled with very valuable mortgage obligations!

[jwparkerjr]

I think I would make any federal assistance to one of the sub-prime lenders contingent on them working with their customers to help them keep their homes out of foreclosure. What’s happening now is people are defaulting and the feds are stepping in to keep the lender out of bankruptcy. That’s great for the lender and the lender’s shareholders, but it does nothing for the borrower. I am against any bailout schemes to help those who got themselves into hot water with these Venus Fly Trap mortgages, but if the insist on ignoring my advice then I want the guy at the bottom of the food chain to get help too.

[snowsislander]

The regulations in question effectively limit a bank's funding exposure to an affiliate to 10% of the bank's capital. But the Fed has allowed Citibank and Bank of America to blow through that level. Citigroup and Bank of America are able to lend up to $25 billion apiece under this exemption, according to the Fed. If Citibank used the full amount, "that represents about 30% of Citibank's total regulatory capital, which is no small exemption," says Charlie Peabody, banks analyst at Portales Partners.

The Fed says that it made the exemption in the public interest, because it allows Citibank to get liquidity to the brokerage in "the most rapid and cost-effective manner possible."

The size of this does surprise me. That's real money, even for Citibank.

I would assume that the Fed is seeing something here that would warrant such exceptional lending.

[Elle Bee]

This unusual move by the Fed shows that the largest Wall Street firms are continuing to have problems funding operations during the current market difficulties, according to banking industry skeptics. The Fed's move appears to support the view that even the biggest brokerages have been caught off guard by the credit crunch and don't have financing to deal with the resulting dislocation in the markets.

Calls to mind the old line:

"If I had understood anything that you just said I might still be a virgin"

.

[nathanbedford]

They are now bending banking rules for soem banks

From your mouth to CNN's ears.

[FReepaholic]

Didn't Congress recently pass more stringent laws making it harder for the average guy to actually declare bankruptcy?

Now the federal reserve (which ain't Federal, by the way) is helping the big boys.

[master_obvious]

Two of the worst banks I can say that I wouldn't shed one tear for if they went belly up, Citibank and Bank of America. Let them suffer the consequences of their greed let them sink!

"Rulers do not reduce taxes to be kind. Expediency and greed create high taxation, and normally it takes an impending catastrophe to bring it down." -- Charles Adams

[vietvet67]